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Barclays' Diamond geezer

• Robert Peston
• 26 Mar 07, 08:48 PM

Is Bob Diamond worth the £22m, or £420,000 per week, he earned last year? Are the star players of his beloved Chelsea football club worth around a third of that?

On one level it's a fatuous question. I have a simple, atavistic view: you're worth what you're paid. If you think you're worth more, go out into the market place and test it.

Diamond has turned Barclays' investment banking arm from an also-ran into a contender. No one in his game doubts that his contribution to Barclays’ highly profitable global debt business has been significant. And he's probably being paid more-or-less the market-price for his kind of talent.

But it's arguable that the market itself doesn't work terribly effectively, that it tends to over-value certain sorts of people - investment bankers, hedge-fund managers, chat-show hosts, former residents of the Big Brother house, Premier League footballers - while undervaluing the contribution made by millions of others.

However, some (but not all) investment bankers and footballers can point to the substantial incremental profits they've generated for their businesses, and they can claim with some credibility that their personal remuneration represents value-for-money in that context (actually, it's pretty difficult to make that claim of Chelsea superstars, in view of the huge financial losses incurred by the club).

We live in an era when financial capital is staggeringly cheap and the profit-generating skills of humans are relatively scarce and highly prized. It's why the gap between the wealthiest and the vast majority is widening in a way we haven't experienced for a hundred years.

There may be social and moral arguments against the widening in that gap.

But it’s hard to make an economic case against it, unless you believe that the prevailing global version of capitalism that rules almost everywhere (barring Cuba and Venezuela) is inefficient, unsustainable and will wither.

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Dear Bill Gates (again)

• Robert Peston
• 26 Mar 07, 08:55 AM

Dear Bill Gates

First, the apology. Having complained here on 6 February that your new Vista operating system was driving me bonkers, it would have been polite to give you an update before now.

And had I been a little less self-obsessed, I would have commiserated with you for the wobble in your share price a few weeks ago when your chief executive that Wall Street’s estimates of revenues from Vista in the coming year were over the top (though analysts still expect Vista to generate comfortably over $15bn of sales in the year from June 2007).

But in delaying my progress report, I gave you the benefit of the doubt. I assumed that Vista would soon become compatible with the assorted tools of my trade, so I could write you a belated note of congratulation.

In fact my Vista experience has gone from bad to worse. One of your engineers has informed me that my HP iPAQ PocketPC will never be compatible with Vista, even though the software it runs is Microsoft software. Hey ho. That’s an expensive and serviceable bit of kit written off prematurely.

Your engineer has however held out the tantalising prospect that Olympus may produce new drivers such that I would eventually be able to transfer sound files from my digital voice recorder to my new Vista laptop. But so far, those drivers are proving a bit elusive and my digital recorder may also become redundant.

But as economists say, there’s no point in obsessing over spilt milk. However, here’s what almost sent me over the edge this weekend.

I installed Office XP on my new laptop, and have been puzzled and irked that Outlook will not save sign-on passwords. It means I have to type in my passwords every time I check my e-mail accounts for new mail.

For weeks I’ve been investigating possible fixes to this annoying glitch. But yesterday I came across an explanation from someone called the Microsoft AppCompat Guy, on .

This is what AppCompat Guy says: “This was a difficult deliberate choice. During the development of Vista, it was discovered that the password storage algorithm used by Outlook was too weak to protect your data from future, potential attacks. Both the security and application compatibility teams decided that protecting your data outweighed the inconvenience of having to retype your passwords. As the appcompat representative, I can assure you this was not a decision we took lightly… �

So just to be clear, Microsoft has created a new operating system that isn’t properly compatible with a best-selling, still perfectly useable version of its own software. Which of course provides quite a powerful incentive for me to spend up to £99.99 on upgrading to Microsoft Outlook 2007 – except that in my current mood, I’d rather stick pins in my eyes.

In a way you’re to be congratulated. Vista should provide a significant boost to Microsoft’s cash flow, from sales of the basic operating system and sales of new versions of other Microsoft software, like Outlook, that are presumably designed to work brilliantly with it. Also there’ll be incremental revenue for the whole computer industry, as customers like me are forced to replace accessories like my HP PDA, which has been Vista’d into obsolescence.

To put it in personal terms, the £650 I spent to replace a dead laptop may lead me to spend a further £400 or so, just so that I can continue to do with my laptop what I expect to be able to do with it.

All of which sounds like good news for you and the IT industry in general.

Except that I’m left with the uneasy feeling that I’ve been ever-so-elegantly mugged. Presumably there’s no connection between your recent sales downgrade and what you might call the negative goodwill generated for customers like me.

Hasta la vista, as they say

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